Ryan v. Ryan, 091819 NHSUP, 213-2019-CV-00023

Docket Nº:213-2019-CV-00023
Opinion Judge:RICHARD B. MCNAMARA, PRESIDING JUSTICE
Party Name:Scott A. Ryan v. Patrick J. Ryan and Access Design, Inc.
Case Date:September 18, 2019
Court:Superior Court of New Hampshire
 
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Scott A. Ryan

v.

Patrick J. Ryan and Access Design, Inc.

No. 213-2019-CV-00023

Superior Court of New Hampshire

September 18, 2019

ORDER

RICHARD B. MCNAMARA, PRESIDING JUSTICE

The Plaintiff, Scott A. Ryan, ("Scott") has brought an action against the Defendant, Patrick J. Ryan, ("Patrick")1 seeking a declaratory judgment that Scott is the 100% shareholder of a company called Access Design, Inc. ("ADI"). Scott alleges that he is the 100% owner of ADI as a result of an agreement entered into between the parties on March 21, 2017. Scott asserts that the contract is in substance a Shareholder Agreement, which alters the legal relationship of the shareholders of ADI, Scott and Patrick.2

Patrick has brought a number of Counterclaims, alleging, inter alia, that the agreement that Scott refers to as a "Shareholder Agreement" is not a shareholder agreement within the meaning of RSA 293-A: 7.32. The Court will refer to the agreement as "the Contract" because the Court has determined that it is in fact a binding contract. 3

Scott has moved to dismiss Counterclaims III-X, XIII and XIV because the Counterclaims are not reasonably susceptible to a construction that would permit recovery. (Mot. to Dismiss ¶ 1.) Scott has filed a Motion for Summary Judgment, alleging he is entitled to specific performance of Patrick's obligation to transfer his remaining 51 shares of ADI to him under the Contract or, alternatively, a declaration that he is the 100% shareholder of ADI as of January 3, 2019. Patrick has also moved for partial summary judgment on Counterclaims III, IV, and XI and Scott's request for specific performance.

For the reasons stated in this Order, both Motions for Summary Judgment are DENIED, as genuine issues of material fact exist. Scott's Motion to Dismiss Patrick's Counterclaims is GRANTED with respect to Counterclaims III-IX and XIII. Scott's Motion to Dismiss is DENIED with respect to Counterclaims X, XI, XII, and XIV.

I. FACTS

Many of the facts do not appear to be in dispute and can be taken from the Complaint, Answer, and Supporting Affidavits to the various motions. Scott is the son of Patrick Ryan and Michelle Ryan. Scott and Patrick were the sole shareholders of ADI for some time prior to 2017. Scott became President of ADI in 2014. In the years leading up to 2017, Scott and Patrick had numerous disagreements about how to effectively run ADI. (Patrick Ryan Aff. ¶ 3.) As a result of these disagreements, Scott and Patrick ultimately decided they should negotiate a buyout, and that Scott would eventually assume ownership of the company. (Id. ¶ 4.)

Scott states that the parties agreed at some point prior to 2017 that Patrick's 80 shares would be valued at $20, 000 per share and that Patrick would have a purchase agreement drawn by his attorney. The agreement between the parties required him to make payments in the amount of $8, 666.66 per month. (Scott Ryan Aff. ¶ 3.) The Contract states that Scott made 27 payments of this amount prior to its execution. (¶ 3.)

Because they could not agree about all of the terms regarding the transfer in stock, they enlisted the services of a mediator. (Patrick Ryan Aff. ¶ 6.) The parties differ as to what the mediation was intended to achieve. Critically, they dispute the results of the mediation. Yet, after a one-day mediation on March 11, 2017, Scott and his wife, Whitney Ryan, and Patrick and his wife, Michelle Ryan, entered into a Memorandum of Understanding ("MOU").

On March 21, 2017, the parties signed the Contract, which was captioned "Agreement for Sale of Stock and Resolution of Past Management Disputes." The intent in signing the Contract was "to formalize the [MOU]." (¶1) The parties agree that the terms of the Contract and the MOU are essentially the same, with some differences. For example, paragraphs are numbered differently, and while the MOU states that "it is anticipated that the BOD consists of Pat Ryan, Scott Ryan and Robert Murcha, " the Contract states, "The parties shall select a third member of the Board of Directors, by agreement, as soon as practicable." (Def.'s Counterclaim Ex. B, ¶ 12); (The Contract ¶8).

It is the interpretation of the Contract that forms the basis of this case. Both parties refer to the Contract extensively in their Pleadings and Affidavits. In relevant part, the Contract provides as follows: 3. The parties reaffirm the previously agreed to sales price of one million six hundred thousand dollars ($1, 600, 000.oo) for the sale of 80 shares of stock in Access Design, Inc. from Patrick J. Ryan to Scott A. Ryan. The parties further reaffirm they agreed to terms of payment for said sale at a price of $20, 000 per share to be paid in monthly installments of $8666.66, inclusive of interest at a rate of 2.5%, until the amount of $1, 600, 000 has been paid in full. The parties further reaffirm that Scott A. Ryan has, either directly or as President of Access Design, Inc. caused 27 such monthly payments to be made, reducing the amount owed for the sale of stock to $1, 366, 000.00.

4.Patrick J. Ryan shall transfer 29 shares of stock to Scott A. Ryan promptly upon the execution of this agreement, resulting in a stock ownership split in Access Design, Inc. of 51 shares owned by Patrick J. Ryan and 49 shares owned by Scott A.Ryan.

5. The agreement to pay $580, 000 for the 29 shares being transferred in conjunction with the transfer of shares set forth in paragraph 4 shall be secured by the promissory note attached as "Exhibit B" running from Scott A. Ryan and Whitney L. Ryan in favor of Patrick J. Ryan and Michelle T. Ryan.

6.The parties agree that the day to day control of operations and management of Access Design, Inc. shall rest solely with Scott A. Ryan. Patrick A. Ryan and Michelle T. Ryan agree that they will not be physically present at Access Design, Inc. without prior notice to and approval by Scott A. Ryan and that they will not initiate contact with Access Design, Inc. staff or employees during normal Access Design, Inc. business hours.

8. During such time as Patrick J. Ryan is the majority shareholder of Access Design, Inc. he has the right to call a Board of Directors meeting if there is a default on a monthly payment of $8, 666.66 as set forth in paragraph 3 and Exhibit

B, or if Access Design, Inc. should operate at a loss for 2 consecutive quarters. The parties shall select a third member of the Board of Directors, by agreement, as soon as practicable.

11. At such time as Patrick J. Ryan and Michelle T. Ryan are released from their obligation as personal guarantors on the Access Design, Inc. line of credit with TD Bank, Scott A. Ryan shall have an option to purchase, and Patrick J. Ryan shall have an obligation to transfer, the remaining 51 shares of stock in Access Design, Inc. to Scott A. Ryan.

13. At such time as Patrick J. Ryan and Michelle T. Ryan are removed from their obligations as guarantors on the line of credit a new promissory note, running from Scott A[.] Ryan and Whitney L. Ryan in favor of Patrick J. Ryan and Michelle T. Ryan shall be signed, reflecting the amount then owed, based on payments made between the date of this agreement and the date Patrick J. Ryan and Michelle T. Ryan are released from their obligations as guarantors on the line of credit. Said note shall also require monthly payments of $8666.66 inclusive...

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